Nu Holdings (NASDAQ: NU), the digital banking disruptor transforming Latin America’s financial landscape, is experiencing an unprecedented surge in performance. Customer acquisition, revenue growth, and profitability are reaching new heights. However, despite these strong fundamentals, NU stock is hovering just above its 52-week low. With top-tier Wall Street analysts backing its potential and an untapped market still ripe for expansion, Nu Holdings presents a rare opportunity that investors may be overlooking.
A Fintech Titan Backed by Heavyweights
Multiple renowned investment firms, including Morgan Stanley, J.P. Morgan, Barclays, and Jeffries, have reaffirmed their Buy ratings on NU stock in February 2025. Analysts foresee a potential 40% upside, pushing NU stock above the $15 mark in the coming year.
However, Citi analyst Rafael Frade remains a lone skeptic, recommending a Sell rating and questioning the sustainability of Nu Holdings’ growth in an unpredictable emerging market. Despite this bearish stance, the overwhelming consensus is that NU’s disruptive model and execution will drive long-term success.
Unrivaled Customer Growth: A Nation’s Worth of Users
At the end of 2024, Nu Holdings reported 114 million customers—an impressive 22% increase year-over-year. To put this in perspective, that’s more than the population of Germany, with 83% of its users actively engaging with the platform.
The catalyst behind this rapid adoption is Nubank’s digital-first, fee-free approach, which has challenged Latin America’s entrenched banking oligopoly. Before Nubank’s emergence, five major banks controlled 80% of the market, burdening consumers with excessive fees and leaving millions unbanked. By leveraging the widespread adoption of smartphones, Nubank capitalized on an overlooked customer base, particularly in countries like Mexico, where half of Nubank’s credit card users had never owned one before.
With an untapped population still in the millions, Nu Holdings’ potential for further expansion remains vast.
Financial Performance: Profits Soaring on a Lean Cost Model
Nu Holdings’ hyper-efficient business model is driving exceptional financial results. The company generated $2.99 billion in revenue last quarter, marking a 50% YoY increase, while net income surged by 53% to $552.6 million.
Key profitability metrics underline Nubank’s strength:
- Annualized Return on Equity (ROE): ~29% in Q4 2024—on par with global banking giants.
- Efficiency Ratio: ~30%, compared to the 50-60% average among traditional banks.
- Cost to Serve Each Active Customer: Under $0.80 per month, thanks to a fully digital infrastructure.
This lean operational model allows Nubank to offer competitive pricing while maintaining high profit margins—an advantage that legacy banks with expensive branch networks simply cannot match.
NU Stock: A Hidden Gem in the Fintech Space
Despite its stellar growth and profitability, Nu Holdings trades at a forward P/E ratio of just 20.5x its projected EPS—a valuation that seems disproportionately low given its trajectory.
This “Brazil discount” often applies to emerging market stocks due to currency and political risks. However, Nu’s fundamentals suggest a severe undervaluation, especially when compared to U.S. fintech peers that trade at much higher multiples.
As investors recognize NU’s dominant market position, sustained growth, and expanding footprint, a significant upward re-rating of the stock appears inevitable. In a market always on the hunt for the next breakout story, Nu Holdings is a fintech powerhouse hiding in plain sight.
